PTT Week 3 - Estimating (Chat)

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Questions and Answers

What is the primary challenge of estimating early in the project lifecycle?

High levels of uncertainty due to incomplete information (correct)

The abundance of skilled labor to assist with estimates

Inability to create a project budget baseline

The lack of available estimating techniques

In cost estimation, what does the 'accuracy trumpet' depict?

The decreasing range of estimation error as the project planning improves (correct)

The maximum cost estimate acceptable for contingency reserves

The allocation of costs to different project phases

The increasing variance in project costs as the project progresses

Which estimation method is most appropriate when a project scope is well defined and historical data is available?

Three-Point Estimating

Parametric Estimating

Bottom-up Estimating (correct)

Top-down/Analogous Estimating

What is a key disadvantage of using a 'parametric estimation' approach?

It relies heavily on historical data, which may not be accurate Signup and view all the answers

In the context of estimating, what does 'padding' refer to?

Including allowances for additional costs in the estimate Signup and view all the answers

The 'Three-Point Estimating' method uses which formula for the Beta (PERT) estimate?

(O + 4M + P) / 6 Signup and view all the answers

When should the 'Rough Order of Magnitude' (ROM) estimate be used?

In the early project initiation phase Signup and view all the answers

How can the impact of optimistic bias in estimates be minimized?

Through independent reviews and using Three-Point Estimating Signup and view all the answers

The learning curve effect is most useful when:

Repeated tasks show a reduction in effort over time Signup and view all the answers

Which of the following is NOT a typical component of a project cost baseline?

Management reserves Signup and view all the answers

You are tasked with preparing a quick estimate for a project with limited scope definition. The project sponsor needs this estimate within the hour. Which estimation method should you use?

Analogous Estimating Signup and view all the answers

Your team has consistently underestimated task durations due to optimism bias. What is the best approach to mitigate this in future estimates?

Use Three-Point Estimating to account for uncertainty Signup and view all the answers

You are preparing a cost estimate for a project that involves complex, repetitive tasks. What method would most likely yield the most accurate estimate?

Learning Curve Analysis Signup and view all the answers

The project sponsor has requested a detailed estimate for a critical deliverable that has a high level of risk and uncertainty. Which estimating technique should you apply?

Bottom-up Estimating Signup and view all the answers

A stakeholder is concerned that your estimates may be padded. How can you justify your estimates and demonstrate transparency?

Show the range of estimates using Three-Point Estimating and explain the variance Signup and view all the answers

You are working with a team member who consistently applies deliberate padding to their estimates due to fear of missing deadlines. What is the best approach to handle this issue?

Use a Three-Point Estimating approach to balance optimistic, most likely, and pessimistic estimates Signup and view all the answers

The project involves tasks that your team has never performed before, and there is limited historical data available. What estimating method should you consider using?

Expert Judgment Signup and view all the answers

Your team has completed a rough order of magnitude (ROM) estimate early in the project. As the project progresses and more information becomes available, what should you do with the initial estimate?

Refine the estimate using a more detailed estimating method like Bottom-up Estimating Signup and view all the answers

You notice that several tasks in your project have been underestimated due to the 'Student Syndrome.' What is a practical solution to mitigate this behavior in future estimates?

Implement shorter task durations with regular progress checkpoints Signup and view all the answers

Your sponsor is concerned about the accuracy of the project's cost estimates, given the volatile market conditions. Which action would best address this concern?

Use a parametric estimate based on current market data and regularly update it Signup and view all the answers

A client has requested an estimate for a project where the scope is vaguely defined and may change. Which estimation method would provide the most flexibility?

Rough Order of Magnitude (ROM) Signup and view all the answers

During the estimation process, you discover that several team members are affected by Parkinson's Law. How should you address this issue in your estimates?

Set strict deadlines with limited flexibility for early completion Signup and view all the answers

A project requires multiple iterations of a complex deliverable, with each iteration expected to become more efficient. Which estimating technique would best account for this learning effect?

Learning Curve Analysis Signup and view all the answers

Your project involves significant overtime, and you notice an increase in defects and errors. What should be your next step?

Re-evaluate the schedule to reduce the reliance on overtime Signup and view all the answers

A stakeholder demands a highly precise estimate early in the project, but the scope is still unclear. How should you respond?

Offer a Rough Order of Magnitude (ROM) estimate and explain its limitations Signup and view all the answers

You have been assigned to estimate a project with several unknown risks. What should you include in your estimates to account for these uncertainties?

Include a contingency reserve based on risk analysis Signup and view all the answers

Your client requests a detailed estimate breakdown for a project using a Three-Point Estimating method. They want to understand the most likely, optimistic, and pessimistic scenarios. What is your next step?

Calculate and present estimates for each scenario using (O + 4M + P) / 6 Signup and view all the answers

During a review of your estimates, you identify that some tasks have been influenced by the 'planning fallacy.' What is a good approach to correct this bias?

Use reference class forecasting to adjust the estimates based on historical data Signup and view all the answers

The project sponsor has requested an aggressive timeline that significantly shortens the estimated duration. What is the best approach to handle this request?

Implement schedule compression techniques like crashing or fast-tracking Signup and view all the answers

You are using a bottom-up estimating approach, but one task has highly uncertain resource requirements. What should you do to improve the accuracy of your estimate?

Incorporate a range of estimates using Three-Point Estimating Signup and view all the answers

A key deliverable in your project has a high degree of variability in its cost due to fluctuating material prices. How can you best manage this in your estimate?

Include an economic price adjustment clause in the estimate Signup and view all the answers

A task has been completed faster than estimated, but the project budget remains unchanged. What is a potential consequence of this outcome?

Parkinson's Law may take effect, leading to unnecessary rework Signup and view all the answers

Your estimates are being challenged for being too conservative. What can you do to address these concerns while maintaining a realistic project timeline?

Present historical data and explain the basis of your estimates Signup and view all the answers

You are finalizing a cost estimate for a complex deliverable. The team has provided a range of optimistic and pessimistic values. Which method would help you develop a balanced estimate?

Three-Point Estimating (Beta distribution) Signup and view all the answers

You have been asked to provide a final estimate for a deliverable with high uncertainty due to ongoing market fluctuations. How should you approach the estimation to account for this risk?

Include a management reserve and apply Monte Carlo simulation for risk analysis Signup and view all the answers

Which estimating technique uses historical project data and adjusts for differences in project size and complexity?

Top-down/Analogous Estimating Signup and view all the answers

The use of a learning curve in estimating assumes that:

The time required to complete repetitive tasks will decrease with experience Signup and view all the answers

What is a significant risk when relying solely on expert judgment for project estimates?

The introduction of subjective bias and optimistic forecasting Signup and view all the answers

When should you use the 'parametric estimating' method in a project?

When there is a large dataset available for similar activities Signup and view all the answers

Which of the following best describes the relationship between the accuracy of an estimate and the level of project planning completed?

Accuracy increases with the refinement of the project scope and WBS Signup and view all the answers

In which scenario would you prefer a Rough Order of Magnitude (ROM) estimate over a Bottom-up estimate?

During the initiation phase with minimal information available Signup and view all the answers

How does Parkinson's Law affect project estimation?

It leads to inflated estimates as tasks expand to fill the available time Signup and view all the answers

What is the main advantage of using Three-Point Estimating with the Beta distribution (PERT)?

It considers a range of scenarios (optimistic, most likely, pessimistic) Signup and view all the answers

Why is it important to document the assumptions used in the estimation process?

To provide a basis for revising estimates if assumptions change Signup and view all the answers

Which method is most suitable when estimating costs for a project deliverable that has been repeated multiple times across past projects?

Parametric Estimating Signup and view all the answers

In what situation would a management reserve be applied to a project estimate?

To account for unforeseen changes outside the project scope Signup and view all the answers

What is the primary purpose of using a 'basis of estimate' document?

To provide detailed information on how the estimate was developed Signup and view all the answers

Which of the following is a potential drawback of using a Bottom-up Estimating approach?

It can be time-consuming and require significant resources Signup and view all the answers

In the estimation process, what does 'contingency reserve' specifically cover?

Identified risks with a known probability of occurrence Signup and view all the answers

What is the main difference between 'direct costs' and 'overhead costs' in project estimating?

Direct costs are tied to specific project tasks, while overhead costs cover general administrative expenses Signup and view all the answers

Study Notes

Project Estimation Techniques

Estimating early in the project lifecycle: A primary challenge is the high level of uncertainty due to incomplete information.
Accuracy Trumpet in Cost Estimation: The range of estimation error decreases as project planning improves.
Appropriate Estimation Methods: Bottom-up estimating is best for well-defined projects with historical data.
Parametric Estimation Disadvantages: Relies heavily on historical data, which may not always be accurate.
Padding in Estimating: Including allowances for additional costs in the estimate.
Three-Point Estimating Formula: (O + 4M + P) / 6, where O = optimistic, M = most likely, and P = pessimistic estimates.
When to Use ROM Estimates: In the early project initiation phase, when the scope is still undefined.
Minimizing Optimistic Bias: Using independent reviews and the Three-Point Estimating method.
Learning Curve Effect: Useful when repeated tasks show a reduction in effort over time.
Project Cost Baseline Components: Direct costs, contingency reserves, and management reserves. Management reserves are not a typical component of a cost baseline.

Project Estimating Methods

Analogous Estimating: Useful for quick estimates when there is little scope definition.
Three-Point Estimating: Accounts for optimistic, most likely, and pessimistic scenarios.
Bottom-up Estimating: Detailed estimates for individual tasks, useful for projects with high risk & uncertainty
Parametric Estimating: Uses historical data and relationships to project costs.
Monte Carlo Simulation: Used for estimating projects with significant uncertainty, including risk.
Rough Order of Magnitude (ROM) Estimates: Provides a quick, general estimate early in a project's lifecycle.

Project Estimation Considerations

Contingency Reserves: Account for uncertainties and potential risks.
Padding: Deliberate underestimation to ensure a buffer for possible issues.
Historical Data Importance: Crucial for accurate and reliable estimates.
Management Reserves: Used to cover unforeseen problems.
Parkinson's Law in Project Estimation: Tasks can expand to fill the available time.

Project Estimation Challenges

Stakeholder Concerns: Addressing stakeholder concerns and maintaining a realistic timeline.
Optimism Bias: Recognizing that estimates might be overly optimistic.
Student Syndrome: Handling estimates where tasks are underestimated, sometimes due to overly optimistic forecasting.
Planning Fallacies: Using historical data for accurate forecasts.
Project Scope Changes: Adjusting estimates as project scope changes.

Project Estimation Techniques and Considerations

Estimating When Scope is Uncertain: Using ROM estimates and explicitly stating limitations.
Market Fluctuations: Using parametric estimation, updated data & Monte Carlo simulation to adjust.
Addressing Uncertainty: Using contingency reserves & Monte Carlo simulation to model risks.
Resource Fluctuations: Implementing appropriate compensation for variations.

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Description

This quiz covers various techniques for estimating project costs and timelines, focusing on early project lifecycle challenges and methods like bottom-up and three-point estimating. Learn about the accuracy improvements and biases that can affect your estimates, as well as when to apply different estimation strategies.